USD/CAD bullish momentum picks up pace – Scotiabank

Eric Theoret, FX Strategist at Scotiabank, believes the pair could set sails for a test of 1.3150/1.3250 in the short term.

Key Quotes

“Relative policy divergence between an increasingly hawkish Fed and a tentatively dovish BoC should weigh on CAD. In terms of sentiment, we note the broad rise in measures of implied CAD volatility across a range of time horizons and the corresponding increase in the premium for protection against CAD weakness. Remain bearish”.

“USDCAD has cleared 1.31 on the back of its fourth consecutive session of gains, rallying toward the late August-early September highs around 1.3150 and the late July high around 1.3250. Momentum signals are modestly bullish, DMI’s are confirming the shift in the balance of risk, and short-term MA’s are bullishly aligned. Near-term support is expected between 1.3050 and 1.3020”.